Folks,

This is long, so I apologize in advance, bare with me.

A 401k is NOT a safe investment. People constantly mistake prior history to future events yet there is no causality here. In fact, with QE3 in the wild, the value of your employer matched dollar continues to degrade.

http://www.federalreserve.gov/newsevents/press/monetary/2012...

The question I ask myself is "What will my dollars be worth at the age of retirement?" and the scenarios I paint continually are ones where I do not like the outcome, should I continue down a traditional 401k path.

@Saryant and @wikwocket's advice is reasonable, if the current model is sustainable. I have personally decided that it is not. This is just me. No hard feelings guys/gals. I just don't trust someone who manages my account making a gain in the good times, but suffering no losses in the bad times.

@hartleybrody

I really really love practical advice. And so you are in luck, because I have a practical "betting on myself" story.

When I moved to Bend, Oregon it was 2005, I was 24, and it was shortly after my brother had passed away. I was pretty emotional and wasn't in a rational state at the time.

So when friends, family, every-freakin-person was saying the following mantra.

"Buy now or be priced out forever"

And with this chant ringing in my ears, I went to a mortgage broker. This broker proceeded to approve me for up to 415k dollar loan, in Central Oregon, with my wage of 45k annually. (If you have been following the mortgage crisis this isn't the worst atrocity)

And sitting there with my young wife, wanting something solid to cling to, a small mechanism clicked in my brain, despite the emotion. It didn't feel right. So we walked away. I said to my wife

"I'll perform some research and we'll come back."

And so what did I do? I did what any solid nerd would do and went out to gather data. How? I learned all about scraping (screen scraping, web crawling, etc) from my new buddy Matthew Turland (plug his book not mine, which had not been written at the time but I'd like to think my quesitons helpd him realize his expertise. Yes it's all about me ;-) http://www.phparch.com/books/phparchitects-guide-to-web-scra...)

Using this knowledge I scraped and regexed the county records (http://www.deschutes.org/Assessors-Office/DIAL-Search-Form.a...) and do you know what I learned? I saw that on average the annual increase in real estate prices in Central Oregon hovered around 3%. Yet by the time 2005 rolled around, 50% YoY increases were the norm.

"Whoa" I thought channeling a Matrix style Keanu. "This is Not sustainable"

And so this is the beginning of "betting on myself". By analyzing the data, I knew that this growth was not going to last, so I convinced my wife (bless her for trusting me) that housing was a malinvestment, even though ALL our friends were arguing our stupidity.

It was almost like the biblical story of Noah, where everyone thinks you are crazy for saying a flood is coming. With everyone thinking you are crazy, you eventually just shut up.

Then the RE market stalled. This were slowing down, but no one was putting it together.

Then Lehman Brothers Crashed. And the World was like "WTF Lehman? Alright this sucks but the losses are limited."

Then the market frickin crashed. By March of 2009 it was beyond ugly. http://www.google.com/finance?chdnp=1&chdd=1&chds=1&...

And here is where I bet on myself again. I poured half our savings into GOLD.

OMG!

OMG!!

OMG!!!

This really is gambling. But the data and the research I had, helped me see that there was this crazy opportunity. Buying into everyone's fear.

One thing I'd like to point out, is that I consulted with my wife. I told her my thesis and she concluded.

"Well you were right about housing, I'm going to trust you. If we lose the money, we will move on."

The last bit was really important. I only risked what WE were willing to lose.

Ok. Where was I? Oh yeah...

So I buy gold, then I start tracking foreclosures. But I get really bored of tracking them by hand. So I write this sweet bot that scrapes the county records and converts the PDF documents to readable text using tesseract (<== so much badassness, I love tesseract)

https://github.com/jfolkins/Deschutes (<== teh codez)

Finally, last year, I reasoned that it was decent enough time to buy (Rent VS Buy argument and data to support it given our local environment) and cashed out our gold and bought RE.

Soooooooo....

Quite the rant, I realize. But hopefully it articulates the "betting on oneself" philosophy that I've taken.

It may not pan out, I'm ok with that. I like my odds better than the 401k folks.

One thing that sets me apart is that I've learned a crap pile about a ton of different topics I never knew anything about. (Scraping, Economics, etc) and am leveraging what I consider expertise into hopefully long term gains.

Take care
-jared

(This is not investment advice. blah blah blah)